Sample Questions
Question 1
Easy
Under OBBBA, which of the following is true regarding the federal annual gift exclusion?
Solution
D is correct.
The annual gift exclusion mechanism (per-donee, per-year, inflation-indexed) is unchanged by OBBBA. The 2026 amount is per donee. Gifts at or below the exclusion do not use the unified lifetime exemption and do not require Form 709. The exclusion continues to be adjusted for inflation in increments roughly every two to three years.
The annual gift exclusion mechanism (per-donee, per-year, inflation-indexed) is unchanged by OBBBA. The 2026 amount is per donee. Gifts at or below the exclusion do not use the unified lifetime exemption and do not require Form 709. The exclusion continues to be adjusted for inflation in increments roughly every two to three years.
Question 2
Medium
A prepaid tuition 529 plan differs from a 529 savings plan primarily in that:
Solution
A is correct.
A prepaid tuition plan allows families to purchase future tuition credits at participating public institutions at today's prices, hedging against tuition inflation. If the student attends a non-participating institution, value may be limited. By contrast, 529 savings plans invest in portfolios with returns depending on market performance but can be used at any eligible institution for qualified expenses.
A prepaid tuition plan allows families to purchase future tuition credits at participating public institutions at today's prices, hedging against tuition inflation. If the student attends a non-participating institution, value may be limited. By contrast, 529 savings plans invest in portfolios with returns depending on market performance but can be used at any eligible institution for qualified expenses.
Question 3
Hard
Series EE and Series I U.S. savings bonds offer a federal tax interest exclusion for education when which specific conditions are met?
Solution
C is correct.
The Education Savings Bond Program allows interest from qualifying Series EE and Series I bonds to be excluded from federal income tax when redeemed for qualified higher education tuition and fees. Qualification requirements: (1) the bond must be issued in the owner's name or jointly with a spouse; (2) the owner must have been at least 24 years old on the first day of the month in which the bond was purchased; and (3) the interest exclusion phases out at higher MAGI levels.
The Education Savings Bond Program allows interest from qualifying Series EE and Series I bonds to be excluded from federal income tax when redeemed for qualified higher education tuition and fees. Qualification requirements: (1) the bond must be issued in the owner's name or jointly with a spouse; (2) the owner must have been at least 24 years old on the first day of the month in which the bond was purchased; and (3) the interest exclusion phases out at higher MAGI levels.
